Best Business Line of Credit in 2023

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A business line of credit provides flexible funds for short-term needs, like inventory or payroll. You only pay interest on the amount you withdraw.

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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
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Business line of credit options & how it works

By Jill A. Chafin | Edited by Sarah Fisher and Janet Schaaf | Updated September 29, 2023
How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
LenderUser ratingsBest forMax. loan amountMin. credit scoreStarting interest rate
Need to add ratingStartups$250,0006603% to 9% (6 months)
6% to 18% (12 months)
9% to 27% (18 months)
Need to add ratingFast funding$250,000625Not disclosed
Need to add ratingUnsecured line of credit$100,000625Starting at 39.90% APR
Fundbox logoNeed to add ratingBad credit$150,0006004.66% (12 weeks)
8.99% (24 weeks)
Need to add ratingTraditional bank$150,000680Prime + 1.75%
Bank of America logo #1Need to add ratingSecured line of creditNot disclosed; minimum $1,000670 for unsecured productsVariable
Need to add ratingNo extra fees$250,000660Not disclosed
Learn more about how we chose our picks.

American Express Business Line of Credit: Best for startups

Max. amount$250,000
Est. interest rate3% to 9% (6 months)
6% to 18% (12 months)
9% to 27% (18 months)
Term length6, 12 or 18 months
Min. credit score660
Min. time in business12 months
Min. annual revenue$36,000

See Personalized Loan Offers

Bluevine: Best for fast funding

Max. amount$250,000
Est. interest rateNot disclosed
Term length6 or 12 months
Min. credit score625
Min. time in business24 months
Min. annual revenue$480,000

See Personalized Loan Offers

OnDeck: Best for unsecured line of credit

Max. amount$100,000
Est. interest rateStarting at 39.90% APR
Term length12 months
Min. credit score625
Min. time in business12, 18 or 24 months
Min. annual revenue$100,000

See Personalized Loan Offers

Fundbox: Best for bad credit

Max. amount$150,000
Est. interest rate4.66% for 12 weeks
8.99% for 24 weeks
Term length12 and 24 weeks
Min. credit score600
Min. time in business6 months
Min. annual revenue$100,000

See Personalized Loan Offers

Wells Fargo: Best for a traditional bank experience

Max. amount$150,000
Est. interest ratePrime + 1.75% to Prime + 9.75%
Term lengthRevolving, no annual review
Min. credit score680
Min. time in business24 months
Min. annual revenueNot disclosed

See Personalized Loan Offers

Bank of America: Best for secured business line of credit

Max. amountStarting at $1,000
Est. interest rateVariable
Term lengthAccount review at 12 months
Min. credit score670 for unsecured products
Min. time in businessSix months
Min. annual revenue$50,000

See Personalized Loan Offers

Funding Circle: Best for no extra fees

Max. amount$250,000
Est. interest rateNot disclosed
Term lengthNot disclosed
Min. credit score660
Min. time in business24 months
Min. annual revenueNo minimum

See Personalized Loan Offers

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What is a business line of credit?

A business line of credit is a revolving form of small business funding that only charges interest on the amount you use. Whereas a term loan offers a lump sum upfront with a fixed repayment schedule, a business line of credit allows you to withdraw funds as needed. You can withdraw up to the credit limit, repay the borrowed amount and withdraw again.Ultimately, a line of credit can help cover unexpected business expenses, such as inventory, payroll or seasonal fluctuations in revenue.

Business line of credit terms, rates and fees

The repayment period for a business line of credit varies by lender, with terms ranging from 12 weeks to five years. Some lines of credit renew annually.

The business line of credit interest rate depends on the amount and terms you choose, your credit score and the lender’s current offerings. Typically, rates can range between 3% to 27% or higher.

In addition, some lenders may charge the following fees:

  • Origination fee: $0 to 2% of the loan amount
  • Maintenance fee: Monthly or annual fee for keeping the line open. Some lenders waive this fee depending on the withdrawal amount or if your business is a startup.
  • Annual fee: $0 to $175
  • Draw fee: $0 to 2% of the withdrawn amount
  • Late fee: Up to 5% of any past-due amount

Business line of credit requirements

Lenders typically look at the following to determine your eligibility for a business line of credit:

  Credit score: Your personal FICO Score and business credit report both play a role in determining your creditworthiness. Many lenders require a minimum credit score of 600 (or more) when you apply for a business line of credit, although having a higher score can help you secure a better interest rate.

  Time in business: Most lenders want a steady track record of at least one to two years, although certain lenders will work with those in operation for only six months.

  Annual revenue: You must show a steady income stream to qualify for small business financing. The amount varies greatly, with some lenders accepting annual revenue as low as $36,000 while others want to see $480,000.

Secured lines of credit vs. unsecured lines of credit

Business lines of credit can be secured or unsecured. A secured line of credit requires collateral, such as real estate or equipment. If you fail to repay, the lender could seize your assets.

Although an unsecured business line of credit doesn’t require collateral, some lenders may put a lien on your business assets or require you to sign a personal guarantee. In this case, you could lose certain assets if you default.

Business line of credit vs. business credit card

A business credit card is another form of revolving credit where you only pay for what you use. The advantages of a business credit card include a quick and easy application process and the ability to use it almost anywhere while earning rewards and bonuses.

The most significant difference between business lines of credit vs. business credit cards is that credit cards carry higher interest rates than lines of credit, typically ranging from 15.24% to 30.49%. Small business lines of credit can be used in more situations. For example, you can’t use a credit card for leasing expenses, payroll or certain vendor invoices, but a small business credit line can cover those expenses.

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Where to get a business line of credit

You have several options when applying for a business line of credit.

Banks or credit unions

You can access different business loans with a traditional bank or credit union. Typically, these lenders offer competitive rates and terms but requirements may be fairly strict, often requiring a solid credit history and revenue, plus several years in business. You might also need to pay more fees and provide collateral to secure the funds.

Online lenders

Since alternative lenders incorporate a streamlined application process, they tend to be more lenient than traditional banks regarding qualifications and requirements and can provide access to funds faster. Certain alternative lenders even work with startups or offer bad credit business loans. But beware, these lenders can come with higher fees and lower credit limits than those from traditional banks.

U.S. Small Business Administration (SBA)

You can also consider an SBA line of credit through the SBA CAPLines program. An SBA revolving line of credit provides short-term financing that can reach up to $5 million with repayment terms of up to five years.

How to get a business line of credit

Here is how to get a business line of credit in six steps.

1. Decide why you need a line of credit — and how much.

Determining why you need the credit line for your business is essential. Do you need flexible funding for inventory purchases or help to cover cash flow gaps, or is it more of a cushion for emergencies? Once you know the purpose of the financing, you can then decide how much you’ll need.

2. Evaluate your qualifications.

Online lenders may be more lenient with business loan requirements than brick-and-mortar banks. However, you will likely pay higher fees and have less flexible terms with an online lender.

If you want a secured line of credit, evaluate the collateral you can provide, such as inventory or equipment. Alternatively, your lender may require a cash security deposit, which can be refunded depending on your account performance.

Check your credit scores in advance to know where you stand. Boosting your credit now can help you secure a better rate and save more money in the long run.

3. Research lenders.

Once you know what’s out there and within your reach, it’s time to compare lenders to find the best business line of credit for your needs. Pay attention to whether the line is for a fixed term, such as 12 or 24 months, or if it renews annually.

If it offers an annual renewal, check whether there is a yearly fee, which can sometimes reach up to $175. It’s also a good idea to see if there is a required minimum payment each month.

Be sure to read business lender reviews before proceeding with the loan application.

4. Gather required documents

When applying for a business line of credit, each lender’s required documents will vary. In general, you can expect lenders to ask for a business plan, personal and business tax returns, financial statements and a balance sheet. Lenders may also have other requirements, such as a business bank account.

5. Apply

The application and approval timeline for a business line of credit can range from one day to several months. For example, Bluevine states that you can receive a decision in as little as five minutes, whereas Wells Fargo can take up to two weeks.

Most lenders will outline the timeline so you know when to expect funds. You may need to provide additional paperwork and documents after submitting the initial application, but your lender will guide you through the process.

How much will a business line of credit cost?

A benefit of taking out a business line of credit is that interest only applies to the amount you withdraw. Business line of credit rates vary significantly from lender to lender but typically range from 3% to 27% or higher.

Example

Samantha has a business line of credit totaling $50,000 with a 10% interest rate. If she withdraws $10,000, she will owe $1,000 in interest. The total amount Samantha needs to repay is $11,000, not $50,000. Once she repays the $11,000, she can access part or all of the $50,000 again.

Uses for a business line of credit vs. a term loan

A business line of credit is similar to a short-term business loan or emergency business loan in that you can use it for various business expenses. However, a business line of credit gives you access to immediate funding without the pressure to use the total amount.

If you need to tackle long-term expenses, a term loan or working capital loan could be a better fit. Business loans typically have fixed interest rates and business lines of credit have variable rates, which may be another deciding factor.

Business line of creditSmall business loan
Repayment scheduleRepayments begin after you make a withdrawal from your line of credit. Interest only applies to the amount you borrow.Repayments start as soon as you receive your loan or shortly after. Interest applies to the entire loan amount.
Terms12 weeks to five years3 months to 25 years
Use of fundsShort-term or immediate expensesOne-time or long-term expenses

Pros and cons of a business line of credit

Even if you’re eligible for a business line of credit, it might not be the best financing for your business’s specific needs.

ProsCons

 Withdraw what you need and when you need it, helping limit over-borrowing

 You only pay interest on what you borrow, not on the total limit

 Usually has lower interest rates and higher borrowing limits than a credit card

 Not suitable for large purchases or long-term expenses

 May need to provide collateral 

 Additional draw or maintenance fees can add up over time

How to choose the best business line of credit

When picking the best business line of credit for your company, you’ll want to compare the following:

  • Interest rate
  • Repayment term
  • Time to fund
  • Additional fees

Most importantly, make sure you can meet the lender’s specific requirements and that their products are available in your state and for your type of business.

How we chose our picks

When picking our best business line of credit options, we considered the required time in business, interest rate and term length.

To appear on our list, lenders needed to meet the following criteria:

  • Minimum credit score requirement between 600 and 680
  • Minimal restrictions on loan uses or purposes
  • Time to funding within two weeks
  • Options for startups and newer businesses

Best business line of credit summary

Frequently asked questions

Most small business lenders generally want an excellent personal credit score of 740 or higher. The better your score, the more likely you’ll secure a low rate with flexible terms. However, many lenders are willing to work with those who have lower scores. For example, Fundbox’s minimum credit score requirement for their business line of credit is only 600.

Just be mindful that having a low or bad credit score will likely result in a higher interest rate. If you can postpone applying for funding, try boosting your credit score to be eligible for the most competitive offers.

Startups and recently established companies might struggle to qualify for a business line of credit and other types of small business loans. This is because most lenders require businesses to have been in operation for at least one year, sometimes longer, with a solid track record of steady revenue.

Fortunately, some online lenders are willing to work with startups or those with limited or bad credit. Be sure to research these lenders, though, since many prey on vulnerable companies. Spend time reading reviews and asking questions before signing on the dotted line.

You may be eligible for a credit line increase once you’ve established a solid repayment history with your lender and your cash flow and income have improved. In addition to helping you access more funds, a rate increase could improve your credit score.

Contact your lender to see if you qualify for a higher credit limit. Alternatively, you can apply for a new business line of credit with another lender and see if you gain approval for a higher amount.

Getting a business line of credit for new businesses can be challenging since most lenders want to see your business in operation for a year or more. However, lenders such as Fundbox might approve a line of credit to new businesses that have been up and running for only six months. Check with each lender to see if they offer a startup business line of credit.

Typically, you should be in business for at least 12 months before applying for a small business line of credit. However, online lenders tend to be more lenient than traditional banks, with some willing to work with newer businesses.

Keep in mind that a business line of credit isn’t your only option for accessing capital. You can also consider the following methods to launch or grow your business: